Working single mother wins landmark case against ‘irrational’ Universal Credit rules
A working single mother has won a landmark High Court challenge against the Government’s Universal Credit rules for assessing earnings.
The Department for Work and Pensions’ approach to calculating earnings for claimants who are paid on a four-weekly basis is “irrational and unlawful”, Mr Justice Garnham ruled.
Sharon Pantellerisco was working 16 hours a week for the national living wage but for 11 months of the year she failed to meet the earnings exemption.
The Child Poverty Action Group (CPAG) say this is because the UC system took account only of her four-weekly take home pay to determine her earned income in a monthly assessment period which was just under the earnings exemption threshold – essentially, four weeks’ earnings were stretched over the calendar-month assessment period in UC.
CPAG estimates that there are around 166,000 UC claimants who are paid four-weekly, any one of whom could have the benefit cap applied if they are working 16 hours per week at national living wage.
Mr Justice Garnham said the claimants are “entitled to a declaration to the effect that the earned income calculation is irrational and unlawful in respect of employees paid on a four-weekly basis”.
He also said in his written judgment: “I cannot see how any reasonable Secretary of State could have struck the balance in the way the SSWP (Secretary of State for Work and Pensions) has done in this case.”
The judge said the impact of the regime contained in the regulations “discourages work when the work available is paid on a lunar month basis”, adding: “In such cases, for the majority of months the Regulations subject the First Claimant to the benefit cap as if she were not working, resulting in her receiving an arbitrarily reduced overall UC award.
“The scheme is said to be designed to be responsive to changes in earned income, and to make work pay to the fullest possible extent. But in these circumstances, it is neither.”
He said there seems to be “a number of obvious disadvantages in the operation of the present arrangement”, pointing out that in 11 out of 12 assessment periods the regulations “treat her (and others in her position) as having earned less income for that period than is in fact the case, because of the dates on which she was paid”.
The judge added: “The result is that she receives substantially less UC, perhaps some £400 per month or 20% less, than would be the case if she was paid monthly.
“That is, self-evidently, a very significant reduction for somebody of modest means.”
Following the judgment on Monday, CPAG’s solicitor Carla Clarke said the ruling recognises that UC’s “inability to take account of non-monthly pay cycles defies common sense”.
She said: “A system that determines the amount of social security low-paid working claimants are entitled to on the arbitrary basis of whether they are paid monthly or four-weekly can only be irrational, unjust and unlawful.”
Ms Clarke added: “Far from making work pay, Universal Credit left our client humiliated and in financial misery – resorting to food banks to feed her children and completely dumbfounded by the fact that she was benefit-capped – even though somebody doing exactly the same work, for the same number of hours at the same rate of pay would be exempt because their employer happens to pay them monthly.”
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